In a recent episode of the CoinDesk podcast, billionaire investor Dan Tapiero, known for his decades-long experience in traditional markets, shared a stark warning for crypto investors.
Tapiero, who has spent 25 years managing portfolios and trading in macro markets, believes the global macro economy is slowing down more rapidly than most people realize.
Economic Slowdown Indicators
Tapiero points to several indicators that signal a slowdown. He highlights weaker-than-expected unemployment numbers and a general deceleration in economic data over the past few months.
While housing data in the U.S. has shown some improvement, other areas, particularly in Europe and China, are showing signs of weakness.
The Swedish Central Bank and the UK have already cut interest rates, and China’s economy has softened significantly, with rates now down to 2%.
Implications for Bitcoin, Ethereum, and Gold
Tapiero, who holds both Bitcoin and gold, does not foresee a recession or panic but suggests that the current economic conditions are bullish for gold.
He notes that gold recently hit an all-time high, which he interprets as a sign of increasing liquidity.
Additionally, Tapiero observes that the U.S. dollar seems to have entered a bear market, with the euro reaching its highest level in some time at 1.11.
Looking ahead, Tapiero remains bullish on Bitcoin and Ethereum, considering them the core assets of the digital ecosystem. While he views other cryptocurrencies as more speculative ventures, he acknowledges that Solana is emerging as a potential core asset.
Federal Reserve’s Role and Bitcoin’s Potential
Tapiero anticipates that the Federal Reserve’s upcoming interest rate cuts could significantly impact Bitcoin’s price.
He notes that when interest rates were at zero, Bitcoin peaked at $65,000 in 2021. With current rates at 5%, Bitcoin remains near the same price level.
Tapiero predicts that if rates drop to 2.5% or 3%, Bitcoin could easily double in value. This prediction is based solely on the relationship between interest rates and Bitcoin’s price, without considering other ongoing developments in the crypto space.
On-Chain Data and Realized Price Metrics
Tapiero also discussed key on-chain metrics that provide insight into Bitcoin’s market dynamics.
He highlighted the growth in total active addresses across all blockchains, which hit 53 million in June, up from 20 million just six months prior. This 150% growth is a significant indicator of increasing user adoption.
One crucial metric Tapiero focuses on is Bitcoin’s “realized price,” which he describes as a more accurate representation of the network’s value. The realized price calculates the average price of all Bitcoin transactions based on when they were last moved from one wallet to another.
As of August 30th, the realized price was around $31,000, while Bitcoin’s actual price was about double that. Tapiero explains that when Bitcoin’s price drops below the realized price, it often signals a buying opportunity, as seen during the FTX collapse in late 2022.
Future Outlook and Investment Strategy
Tapiero suggests that while the current market does not present a “golden buy” opportunity, it is also not a time to sell.
He compares the present conditions to the pre-pump phase before the 2021 bull run, indicating that a similar scenario could unfold in 2024, leading to potential fireworks in 2025. He advises investors to pay attention to diminishing returns on sell opportunities and remain cautious, as the market may not reach previous highs.
Conclusion
In summary, Dan Tapiero provides a nuanced perspective on the current economic slowdown and its implications for traditional and digital assets.
While he remains cautious about the broader economy, his outlook on Bitcoin and Ethereum remains optimistic, particularly in light of potential interest rate cuts and positive on-chain data. Investors should consider these factors when making decisions in the current market environment.